In the context of card transactions, what is a chargeback?

A chargeback refers to a transaction dispute that results in a reversal of a payment. This typically occurs when a cardholder contests a charge on their account, which can happen for various reasons, such as unauthorized transactions or dissatisfaction with a product or service. When a chargeback is initiated, the funds are returned to the cardholder, and the transaction is removed from the merchant’s account.

The chargeback process serves as a consumer protection mechanism, allowing customers to reclaim their funds if they feel that the transaction was unjust. This is an important aspect of card payment systems, as it helps maintain trust and fairness within consumer transactions. The correct answer aligns with this understanding of chargebacks, emphasizing their role in financial transactions.